Swinging for Defenses

The Tulsa Stadium Trust specifically targeted three contractors to manage construction of the new Tulsa Drillers stadium planned for downtown. The trust members wanted to give the job to a Tulsa company and only three local firms were thought to have the necessary qualifications and resources.

"We looked primarily for Tulsa (businesses) because it is a Tulsa project," said Reed Woods, president of Stonebridge Group, which is acting as project manager for the trust. "The business [assessment district] is a form of taxation, so we felt it would be best if it went to a Tulsa company."

The nine-member trust is overseeing a $60 million investment to build the Drillers Stadium and also acquire land near the stadium for development of family-friendly, point-of-destination businesses to complement the ballpark. Private donors have pledged $30 million toward the project, $5 million will be paid through the Drillers 30-year lease and $25 million will come from taxes assessed on downtown property owners during the next 30 years.

The City Council created the special assessment district in July to fund the stadium project. A group of downtown property owners, however, has filed a lawsuit, claiming they will not benefit from construction of the stadium and should not be forced to bear the financial burden.

Woods said the trust held an "open, competitive bid process" for the stadium project, and any contractor could have submitted a bid. But Stonebridge specifically sought out Manhattan Construction Company, Flintco Constructive Solutions and Crossland Heavy Contractors. Each company submitted a bid May 30, and the bids ranged from $39.2 million to $40 million. Woods said Stonebridge only pursued Tulsa companies that had stadium experience and that Stonebridge believed would be able to get an insurance company to guarantee the contractor's performance.

"We're very familiar with all the local contractors... and making the requirement that the project be bonded eliminates a whole bunch of people," Woods said. "We identified those three companies, and we wanted to make sure we received proposals from them."

No other company submitted a bid.

Local Focal

Manhattan submitted the low bid, at $39.2 million, which Woods said the company was only able to offer by donating more than $1 million of its fee.

"Manhattan really wanted to have the project, and their pricing reflected that," he said. "In essence, [Manhattan] offered to donate half of their normal fee to the project."

The price offered by Manhattan is guaranteed, meaning no unexpected developments will drive the trust's cost over $39.2 million. Manhattan also agreed to a $5,000 daily late fee if the stadium is not completed by the end of February 2010.

City Councilor Eric Gomez, whose district includes the stadium site, said that targeting Tulsa firms for the project was absolutely the right way to go, and he does not think the trust would have received a lower bid by searching for firms outside the region.

"We want to maximize the opportunities for developers here in Tulsa. We don't want some California company [for example] coming in to benefit from Tulsa development," he said. "I think we have a wonderful bid.

Woods said the trust was expecting bids around $40 million for the 6,200-seat Drillers Stadium, based on comparisons with 6,500-seat Arvest Ballpark in Springdale, Ark., which Crossland built for $33.4 million. Woods said an additional $6 million was spent for infrastructure related to the Springdale ballpark. Flintco bid $42 million for the stadium project.

Manhattan's $39.2 million bid includes the cost of all subcontractors that will be used for the stadium. Each subcontractor project will be competitively bid, and the bids will be reviewed by the Tulsa Stadium Trust. If the subcontractors cost less than originally projected by Manhattan, the savings will go back to the trust or be invested in the ballpark to create additional amenities.

Technically, the winning bidder for the stadium project was Tulsa Stadium Construction Co. LLC, a partnership between Manhattan and the Tulsa Community Foundation that was formed after Manhattan produced the low bid in May. The foundation stepped in and agreed to buy a $25 million bond from the stadium trust after 27 traditional financing entities were approached by the trust but declined to take part in the financing. Woods said the other prospective lenders turned down the stadium because of the nationwide credit crunch and because of uncertainties about the trust's ability to pay back the loan.

If the lawsuit filed by downtown property owners is successful in blocking collection of taxes for the ballpark, the stadium trust would have no source of income and no way to pay its debt.

City Councilor John Eagleton, who is also an attorney, said the plaintiff in the lawsuit has "a very difficult burden of proof to meet," and he called the trust's funding mechanism "rock solid." Woods said the trust's attorneys have concluded the lawsuit has "no merit."

"Unless a large explosion takes out a good portion of downtown Tulsa, it's a reliable funding mechanism," Eagleton said.

Regardless of whether the lawsuit is frivolous, the City Council could have improved the trust's ability to secure financing from a traditional lender if it had offered to guarantee the bond. Under that scenario, the city would have found another funding source if the business assessment district fell through, but the Council was unwilling to take that step.

"I was absolutely emphatic that the City of Tulsa and the citizens not have any obligations for any shortfalls," Councilor Bill Martinson said. "The trust was put together very specifically to be financed through the philanthropic community and the businesses inside the [Inner Dispersal Loop], and I didn't think it was appropriate for the citizens to take a financial risk on something they hadn't been given the opportunity to vote on specifically."

Martinson, who is not an attorney, said he is not qualified to comment on the merits of the lawsuit.